Business Estate Planning
Personal estate planning decides what happens to your family. Business estate planning decides what happens to the company, your partners, and the people on your payroll. We handle the insurance side, key person coverage and buy-sell funding, and coordinate with your attorney and CPA on the rest.
Start with the hard question
If you or a co-owner died tomorrow, what would happen to the business? Who would own the deceased owner's share, who would run operations, and where would the money come from to keep payroll moving while everything gets sorted out? Business estate planning is simply answering those questions in writing, and putting funding behind the answers, before anyone has to ask them for real.
This page is for owners. If you're planning for your family and personal assets, beneficiaries, life insurance, and long-term care, start with our personal estate and legacy planning page instead.
Key person life insurance
Protects the business against the financial hit of losing the one person it can't easily replace.
Buy-sell agreement funding
Makes sure a partner's share changes hands smoothly, at a fair price, with cash ready on day one.
Succession basics
A written answer to the question every owner eventually faces: who runs this next, and how?
Trusts & legal protection
Attorney-drafted structures plus affordable ongoing legal access through LegalShield Small Business.
Key person ("key man") life insurance
Most businesses have at least one person whose absence would do real financial damage: a founder, a top producer, the partner who holds the client relationships or the technical know-how. Key person life insurance protects the business itself. The company buys a policy on that person, pays the premiums, and receives the benefit if the worst happens.
The payout gives the business breathing room to:
- Replace lost revenue while the business regroups and recruits.
- Pay down loans or lines of credit that depended on that person's involvement.
- Reassure lenders, vendors, and customers that the company can keep its commitments.
- Fund the search, hiring, and training of a successor.
How much coverage a key person policy should carry depends on the person's role, the revenue tied to them, and any debt their involvement supports. We help you think that through with the carriers we represent, and our life insurance page covers the policy types themselves.
Buy-sell agreement funding
A buy-sell agreement is a contract between owners that says what happens to an owner's share when they die, become disabled, or leave the business. Without one, a deceased partner's share can pass to a spouse or heirs who never wanted to run a business, while the surviving owners scramble for cash to buy them out.
The agreement is drafted by your attorney. Our role is the funding: making sure the money to complete the purchase exists the day it's needed, which is usually done with life insurance. Two common structures:
Cross-purchase
Each owner buys a policy on the other owner(s). When one dies, the survivors use the payout to buy the deceased owner's share directly from the family.
Entity purchase (redemption)
The business itself owns the policies. At an owner's death, the company receives the payout and redeems the deceased owner's share.
Which structure fits depends on how many owners you have, tax considerations, and how the agreement is written, which is a decision to make together with your attorney and CPA. Disability can also trigger a buyout, so many agreements pair life insurance with disability buyout coverage.
Business succession basics
Succession planning is bigger than insurance, but insurance is what makes most succession plans work, because it creates cash exactly when the plan needs it. The basic sequence looks like this:
- 1Put a value on the business, and agree on how that value gets updated over time.
- 2Decide who takes over: a co-owner, a family member, a key employee, or an outside buyer.
- 3Put the agreement in writing with your attorney, so the plan survives a disagreement.
- 4Fund the plan, usually with life insurance, so the money exists the day it's needed.
- 5Review it when anything changes: a new partner, a marriage or divorce, a big jump in value.
None of this has to be finished in a week. The goal is a plan that exists on paper, has funding behind it, and gets a fresh look whenever the business changes.
Business trusts, in plain English
A trust is a legal arrangement where one party holds assets, which can include ownership of a business, for the benefit of others. Owners use trusts for goals like keeping a business interest out of probate, managing a gradual handoff to family, or holding ownership for heirs who aren't ready to run anything yet.
Whether a trust helps your situation, and which kind, depends on your ownership structure, your state, and your tax picture. That is attorney territory, and we say so plainly. What we do is coordinate: making sure the life insurance, beneficiary designations, and buy-sell funding line up with whatever your attorney drafts, so the documents and the dollars tell the same story.
Legal protection with LegalShield Small Business
Estate and succession documents are drafted once. The legal questions of running a business show up every month: a contract you'd like reviewed before you sign, a customer who won't pay, a notice from the IRS. LegalShield Small Business plans give you ongoing access to a provider law firm for a monthly membership, so asking a lawyer a question stops being a budget decision.
Depending on the plan, membership can include:
- Attorney consultations on business legal questions as they come up
- Contract and document review before you sign
- Debt collection letters when a customer won't pay
- IRS audit assistance if a notice arrives
You can see the current small business plans and pricing for your state, and enroll online, without contacting us first. For the full picture of LegalShield and IDShield, including personal and family plans, see our LegalShield & IDShield page.
Kate Spilsbury is a licensed insurance agent, not an attorney or tax advisor. This page is educational. Please coordinate the legal and tax decisions described here with your attorney and CPA; we're glad to work alongside them.
Business estate planning questions, answered
What is key person (key man) life insurance?
It's a life insurance policy the business buys on an owner or employee whose loss would seriously hurt the company: the rainmaker, the founder, the one person who holds the key relationships or know-how. The business pays the premium, owns the policy, and receives the benefit, which gives the company cash to stabilize, cover obligations, and fund a replacement.
How does life insurance fund a buy-sell agreement?
A buy-sell agreement says what happens to an owner's share of the business at death, disability, or exit, and life insurance is how the purchase actually gets paid for. When an owner dies, the policy pays out, and that money buys the share from the owner's family at the price the agreement sets. Without funding, a buy-sell is a promise with no cash behind it.
Does my business need a trust?
It depends on your goals, your ownership structure, and your state, which is exactly why a trust is an attorney conversation. Owners use trusts for things like keeping the business out of probate, managing a transition to family, or holding ownership for the benefit of heirs. We can explain the insurance pieces and coordinate with your attorney, but the trust itself should be drafted by a lawyer.
What does a LegalShield Small Business plan include?
Depending on the plan, LegalShield Small Business memberships can include attorney consultations, contract and document review, letters and phone calls on your behalf, debt collection assistance, and IRS audit assistance. You can see the current plans and pricing for your state, and enroll online, through our LegalShield site.
Is Mere Benefits a law firm or tax advisory?
No. Kate Spilsbury is a licensed insurance agent, not an attorney or tax advisor. This page is educational. We handle the insurance side, key person coverage, buy-sell funding, and related policies, and we coordinate with your attorney and CPA so the legal documents and the funding actually match.
Not sure how this applies to your business? Let's talk.
One free conversation and we'll map what your business already has in place, what's missing, and which pieces belong to us, your attorney, and your CPA.
- No cost to you
- RSSA® · CMIP®
- No pressure, ever